In the News

LPL super OSJs join FSI, helping it regain ground


By Michelle Zhou
October 4, 2016

The Financial Services Institute may have lost LPL Financial as a member, but it is regaining ground by welcoming three super OSJs affiliated with LPL to its roster.

In its latest membership update, the Washington-based industry group named 15 new firms, among them Private Advisor Group, Advantage Financial Group and Integrated Financial Partners — all offices of supervisory jurisdiction affiliated with LPL. They bring some 800 advisers with them, according to FSI.

With these additions, the business group now represents 111 independent broker-dealers and advisory firms.


The move marks the first time FSI has allowed super OSJ groups connected with a non-member firm to join as full members. LPL discontinued its long-standing membership earlier in the year to open its own lobbying and government relations office in Washington.

“The super OSJs saw the value of our overall advocacy and the issues we are tackling, and wanted to be involved like a full firm member,” says Chris Paulitz, FSI’s senior vice president of membership and marketing.

The presence of these super OSJs will be a great benefit to FSI’s network of firms and help with its overall lobbying efforts, added Paulitz, given their size and influence in the regional advisory space.

“We can tell them to send letters to their members of Congress asking for a particular policy change we are pushing. Having them go to their advisers and help with our advocacy is going to prove pretty significant for us.”

Joining FSI is an integral part of the firm’s objective of staying involved in the current challenges facing the industry, says John Hyland, founder and managing director of Private Advisor Group, LPL’s largest OSJ with over 620 advisers in 34 states.

“Given our unique size and scale it’s important that we are involved in the conversation and remain active,” Hyland says. “We don’t want to just sit back and be a recipient of what happens. We want to be part of that process on behalf of our advisers.”

Regarding LPL’s departure from FSI, Hyland asserts that there is no pressure to follow suit, as Private Advisor Group is a fully independent firm and its advisers are not limited to LPL as an asset custodian. Its independent RIA currently has close to $10 billion in AUM.

Hyland believes that FSI is more representative of the industry as a whole, which “aligns with [their] goal of serving the interests of advisers and advocating for them in Washington.”

FSI’s decision to welcome the three super OSJs is a smart one, says Jeff Nash, CEO of Nash Consulting Group, a practice management and adviser transition consultancy.

“FSI has built a loyal following among independent broker-dealers and their advisers as an effective lobbying organization, and now they are showing the industry that there are truly multiple avenues that can be taken to become a part of the organization,” Nash says.

It also doesn’t hurt that Private Advisor Group has signed up, he adds, as the firm is widely viewed as one of the largest and most successful super OSJ groups in the LPL community. “It wouldn’t be surprising to see super OSJs across the industry take note.”

FSI has seen twice the number of new members this year compared with the two previous years — in 2015 it added only six new firms and in 2014 seven. The surge in demand is largely due to the Department of Labor fiduciary rule, which will go into effect in April, 2017.

“We have consistently heard from our new members that they understand the value of our advocacy and the assistance we are offering in complying with the DoL rule,” says Paulitz.

Although FSI is actively pursuing the lawsuit it filed in June seeking to vacate the rule, Paulitz added, it has made clear to its members that they must prepare for compliance nevertheless.

To that end, FSI has created a suite of resources and tools to help jumpstart the process, including a best interest contract exemption template, compliance guide and disclosure website template. So far, over 90 members have bought the tools, according to Paulitz.

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